Thursday, March 31, 2011

The Mongoose can Sleep in Peace

News that the Bronx Zoo cobra is no longer slithering through the darker purlieus of  Brooklyn and Queens brings to mind the time the lion escaped from the Washington Zoo and went to the Petagon and ate a general a day and no one ever missed them.

An Invitation to DeLong

Neil Barofsky made a noisy exit from his role as inspector general of TARP, excoriating the Treasury for (my words, his sentiment) breaching its covenant with the American people:
Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership.
These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken “into account.” Rather, they were a central part of the compromise with reluctant members of Congress to cast a vote that in many cases proved to be political suicide....
Indeed, Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy. 
 In short, Barofsky allies himself with a growing chorus of voices who are coming to perceive the American economic model as an examplar of crony capitalism, if not a banana republic ("kleptocracy" is perhaps too strong)--in any event, a small network of interconnected elites who ringfence themselves in warm nimbus of a beneficent government letting everyone else go hang.  See also link, link.   What's remarkable is how far this complaint has metastasized beyond the hysterical left--no more just Naomi Klein and Michael Moore, but seasoned conservativs like Michael Barone and Richard Vigilante, and market liberals like Simon Johnson or Raghuram Rajan.  These new critics are of a tendency too sophisticated to see President Obama as a vulgar socialist.  They see him as something worse: as an elitist/statist who believes that government is the privilege and responsibility of the good and great.

Brad DeLong showcases Barofsky.  DeLong demurs: "A considerably harsher verdict on the Obama Treasury than I would have handed down," DeLong declares.  The temperate nature of the demurral is itself worthy of remark: when DeLong encounters something he doesn't like, he customarily shampoos it with peanut butter and sand.

Which makes it all the more urgent to suggest: take it seriously, Brad.  Clearly you understand that "the Barofsky tendency" (for lack of a better name) cannot be dismissed out of hand.  But can it be dismissed at all?  If the critics are wrong--if the Obama economy has not become an elitist/statist ring-fence, rewarding its enemies and dismissing everyone else--then where do the critics go wrong?  I don't think that you can dismiss them as motivated by mere venality.  For the most part I don't see these critics as anything other than honest seekers after the truth (some have carped that Barofsky wants to run for office; I can only say I hope so).  They may make errors of analysis but these people are sophisticated and well-schooled and their errors, if any, are likely to be subtle and difficult to avoid.  You might be the academic best equipped to identify and defuse them.

Or to acknowledge that they are, in part or entirely, correct.  So, how about it?  

Wednesday, March 30, 2011

Alan the Sheep-Bleeper

In case you haven't seen it:
With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.
That would be who?  Why, Alan Greenspan, who, after steering the ship of state into an iceberg, unaccountably did not retire to a monastery for a life of fasting and prayer.  No, he's back lecturing us on economic management and even more unaccountable, actually finding a public forum.   Henry Farrell salutes him for a "sublime combination of supreme self-confidence and utter cluelessness," but recognizes the remark as true in the sense of  “With notably rare exceptions, Russian Roulette is a fun, safe game for all the family to play.”

Or as a wise man (not Alan Greenspan) once said--"but if you bleep just one sheep!"  Oh, go look it up yourself.

Private Equity Unveiled

I was having coffee with my bud Ignoto on the patio outside the Palookaville Borders today, in the warm breezes and the spring sunshine.

"Three questions," I posed to Ignoto, who knows much more about this stuff than I do.  "One, is it true that there was a ton of private equity investing between '03 and '07?  Two, can you generalize as to what they spent it on?  And three, isn't it true that they lost a bundle?"

 Answers: "Yes as to one and three" (which is pretty much what I expected).  "As to two--well, let me tell you how private equity makes its money.  Forget about 'undervalued investment opportunities.'  Forget about improved management,' blah blah.  The components are: (a) easy money; and (b) nonrecourse finance.  The banks were desperate to move money; the PE firms are strong enough they can insist on nonrecourse.  So, leverage up on debt, say six-one, and keep what flows throw to the equity.  It's that simple."

Nonrecourse.  I should have though of that.   

Fun fact: The annual budget of the Securities and Exchange commission is about $1.1 billion. Seven top Wall Street investment fund managers--each individually--make more than that.

Tuesday, March 29, 2011

The Pat Sejak of Cartoon Characters

Commentary publishes something I can unreservedly endorse:
For decades, comedy writers have puzzled over a mystery: Why is Mickey Mouse more famous than Bugs Bunny? Mickey isn’t funny or interesting. He cannot produce an anvil or a Carmen Miranda hat out of the air. All in all, his “good mouse” act is a toothless, nice-guy bore.
But Bugs, on the other hand, can do accents, knows how to use basic weaponry, and looks terrific in drag. He’s a gender-bending gun nut who makes gleeful and hurtful fun of people with disabilities (Elmer Fudd—speech impediment). About the only respectable thing about him, from the perspective of the academic and cultural policemen, is that he appears to be a vegan.
Why indeed.  The propounder (Rob Long)  never quite answers his own question, but at the risk of being tedious, I offer a thought: it's the same reason why the most boring  characters on TV have the greatest staying power: Perry Como, Alex Trebek, Pat Sejak, Regis Philbin.  We like in-your-face but we  want something quiet and reassuring to come home to.  

For a New Independence

I'm still mulling over this survey suggesting that (as the presenter puts it) "Republicans are more scientifically literate than Democrats or independents are." Yes, that's what it says: across 19 categories, Republicans come across as best informed in 16 categories, Democrats in only two. By contrast, Democrats come across as worst informed in seven categories; Republicans in only two(the balance comes from "Independents," of which more infra).  Some of the spreads are pretty narrow, with one notable exception: 57.6 percent of Democrats believe that humans evolved from other animals, only 41.5 percent of Republicans (Dems' worst score was on pesticides: evidently 44.5 percent of Democrats believe that exposure necessarily causes cancer).

But back to those "independents:" they came off as worst of the three contenders in 10 categories; best in only one (continental drift, by only half a point).  A number of commentators have remarked on how this just goes to show that independents are the least connected, the least involved, the least, well, informed of any.

Which scratches a particular scab with me.  A few months ago, for my sins I found myself getting voire dired by the Palookaville DA to determine my fitness to serve on the jury in a gruesome and high-visibility criminal case.  He was having some trouble.  "So, you don't count yourself as a liberal, then."--"Not exactly."   "But not a conservative?"  --"No, not that either."  "Well, I guess you are a sort of an independent, then."

What I hope I said then--but I can't exactly remember--was: look, I just don't think it is a very helpful focus of inquiry.  I'd concede that my views don't seem to track particularly well on a standard scale.   But "independents" very often are the disconnected and the uninvolved.   I think of myself as deeply connected and involved.    It's just that I don't track very well.

Thing is, I think there are a lot of us--independents who are not disconnected.  Maybe not as many as the other kind but among, e.g.,, blog readers and writers, maybe more.  Some may be apostate Republicans who remember life before the prescription drug benefit.  Some may be apostate Democrats who are revolted at the growing police state, or the metastasis of crony capitalism.  Some may--well, they may be a lot of things, but they aren't "independent" in the conventional sense.  Like I tried to tell the prosecutor.

Footnote:  As you might guess, he struck me.  But more interesting to me at least--I've been voire dired a dozen times over the last 20 years, never sat on a jury.  Must be those lunches of onions and sour milk I tank up on before submitting to questioning, just like I used to do for Army inspections. 

Another footnote: Would I have aced the science test?  I doubt it, but I won't go into detail. 

Sister Miriam Joseph on the Liberal Arts

One of my alltime favorite Shakespeare books is Shakespeare's Use of the Arts of Language, by Sister Mirian Joseph-- actually better understood as a catalogue of rhetorical examples drawn from Shakespearean sources.  It's learned in an old-fashioned way, nonetheless delightful on every page (I keep it handy as a bedside book).  I've just now been able to lay my hands on a copy of her other big book, The Trivium: The Liberal Arts of Logic, Grammar, and Rhetoric.  I'm only just getting started but I can see I am in for a good time:

 The seven liberal arts differ essenetially from the many utilitarian arts (such as carpentry, masonry, plumbing, salesmanship, printing, editing, banking, law, medicine, or the care of souls) and from the seven fine arts (architecture, instrumental music, sculpture, painting, literature, the drama, and the dance),  for both the utilitarian arts and the fine arts are transitive activities, whereas the essential characteristic of the liberal arts is that they are immanent or intransitive activities.

The utilitarian artist produces utilities that serve the wants of humanity; the fine artist, if he is of the highest order, produces a work that is "a thing of beauty and a joy forever" and that has the power to elevate the human spirit.  In the exercise of both the utilitarian and the fine arts, although the action begins in the agent, it goes out from the agent and ends in the object produced and usually has a commercial value; and therefore the artist is paid for his work.  In the exercise of the liberal arts, however, the action begins in the agent and ends in the agent, who is perfected by the action; consequently, the liberal artist, far from being paid for his hard work, of which he receives the sole and full benefit, usually pays a teacher to give needed introduction and guidance in the practice of the liberal arts.
 Italics added.  There, I hope that clarifies matters.  Or she might have added "ends with the agent until he gets a tenure-track position."   

Well, We Always Said We Were Organized

Chris Blattman picks up a priceless (but actually predictable) story about mob life in the only nation where gangsters actually have to register with the police.

[Fn.: Am I saying that Yakuza is a bunch of nice guys?  I am not.  It's  a gang of murderous thugs.  But with a sense of social responsibility, right?]

Do I File This as "Markets in Everything"? Or "Arbitrage Opportunity"?

The Wichita bureau is amused by a WSJ story on fare-dodgers on the Scandinavian subways. Their solution: they insure, and the insurance.  Evidently it is actuarially sound--premiums match payouts.  Then as any Econ 1A student could tell you (yes?)--let F=Fine; let p=probability of getting caught; let D=premiums at the insurance scheme. Then if the aggregate F*p is less than D, it all adds up. Norwegian scofflaws complain that the fare is too high but of course this is incomplete. You could just as well raise F or p and bring on the traffic police.

[Minor annoyance: I can't figure out how to use the "less than" symbol in text; Blogger wants it to be an HTML tag.]

The Wichita bureau notes a second transport angle that I (and others?) had missed:
Odd that the Republicans aren't targeting the Amtrak subsidies as outrageous support for rich democrats in a part of the country they've all but abandoned.
He's right on that, yes? Is this because K street lobbyists take a lot of Amtrak?

Monday, March 28, 2011

Never Heard This One Before

If you sit by the river long enough, you will see the body of your enemy float by.

Do You Sincerely Want to be Rich?

TheStreet has an odd one up this afternoon on 10 Reasons Why You Aren't Rich.  Rather: virtually every word of it is good advice--take charge of your life, get rid of bad habits, don't blow it all on toys, etc.  I'd concede that a list like this is likely to keep you out of the poorhouse.

But rich?  Somehow the adviser missed the most obvious way to get rich in this society (aside from being born that way) and that is that you've got to want to  be rich.   I know I've veering dangerously close to a feel-good pep-me-up here, but I'm sure that nothing breeds money quite so well as the desire to breed money--plus prudence, responsibility, good habits, all that other stuff.  

I know: the unemployment lines are littered with former mortgage brokers (say) who just loved to have all the moolah splashing around.  The point is they didn't follow the other rules--they drank their own Kool-Aid.

And I know it is easy to identify those models of probity and prudence who are also zillionaires: Warren Buffett, of course; John Bogle; Peter Lynch. They're all paragons of good behavior but they also liked making money--so much so they seem at times almost to have forgotten that they were doing it. 

Meanwhile, there are quite a number of schoolteachers, ministers, social workers, whatever, who do buy the prudence and responsibility line and are still chugging along on $45,000 year.  The point is, the ones I'm talking about--they don't really mind.  Wasn't it Joseph Heller who said he had one thing no zillionaire has, and that is "enough"?

Trivia note: That headline is from one really superb business book. At least I remember it so. Wonder if it would hold up well after a generation.

Sunday, March 27, 2011


I'm fighting some kind of flu bug today so I'm not going to hold forth at length but I did want to catch one thought before it escapes me--this about the great 22-year-old Barbarians at the Gate which I just now got round to reading. Specifically: a quick search discloses that the word "fair" occurs 26 times in this text. A couple are off point but most of them are bankers complaining about "fairness" or its opposite. "It just wasn't fair," Roberts recalled quietly. ... "I thought you were going to be fair. That wasn't fair at all." ... "[T]o hand the assignment to Drexel wouldn't be fair."

And so forth. As you may be able to surmise, "not fair" or its equivalent usually means "I'm not getting as much as I want." These philosophers never seem to trouble to continue what principle of fairness they are appealing to here; but in fact I suspect that "principle" has very little to do with it and they are appealing, rather, to the principle of fairness they invoked when they lost a schoolyard game of glassies.

But people! This is money we're talking about here! Moreover, it's a zero sum game! You're grownups! You are world-class masters of the culture of greed! What could you possibly care about fairness?  Or as my mother might have said: life isn't fair--deal with it!

A related insight: I'm struck over and over again at the extraordinary grumpiness of these zillionaires as they scratch and claw to add an extra zero to their swag. They're touchy, they're cranky, they're always ready to sense a slight.  These are among the richest people in the world and they go around ready to blow off like Christopher Moltisanti. People you've got everything! Or at least everything you said you wanted! Life is short! Smell the roses!

No? I thought not. Ah, well...

Afterthought: while putting this together, I idled over to my aggregator and read Glenn Greenwald's bravura account of the Koch Brothers and what he so aptly calls "billionaire self-pity." Up at that level, must be somethig in the water.   

First Name So?

The judge in the Wisconsin collective bargaining battle is Judge Sumi.

Thanks, John, but I bet we are not the first to think of this.

Saturday, March 26, 2011


Elizabeth Taylor's last honest-to-god acting job was in 1983 (in Noel Coward's Private Lives).  Nobody ever heard of Geraldine Ferraro until 1984.

Ya Can't Lose if You're Not at the Table

The subject for the moment is "market share."  Specifically how, over and over again, grownups who you think would have known better, belly up to the table and double down on the green felt just because, well, just because everybody else is doing it ("If your big brother jumped off a 20-story building, would you do so too?"--"I don't kno-o-ow...").  Or whatever.

Exhibit A: Floyd Norris' gripping piece in Thursday's Times about Washington Mutual and how they knew perfectly well what a lunatic scenario they were playing out when they shoveled money into subprime just as all the supports were giving way.

Exhibit B: Barbarians at the Gate (which I'm just now getting round to) and its account of how Henry Kravis, the supposed grand supremo of leveraged buyouts, proved himself the crown prince of winner's curse.  We're talking about the takeover of RJR Nasbisco here, a slam- bang public brawl that Kravis got into out of personal pique and got out of buried under a mountain of debt from which he spent years attempting to dig himself out.

Exhibit C: Fannie and Freddie, facially the most sophisticated players in the real estate market, who committed ritual suicide in the very presence of the taxpayers who now have to clean up the carnage.

In each case, you have to ask yourselves: why did they do that?   Sure, they were in it for the money, but as Brady Hawkes never tired of telling us, you've got to know when to walk away, know when to run.  It's  hard to  believe that any sensible poker player would have stayed in any of these games as long as these players did.

So, what (if anything) is different in finance?   I suppose there are probably different answers for different situations.  Of WaMu, Norris suggests something about maintaining market share.  This is beguiling, but weak: 100 percent of nothing is still nothing, and WaMu's market share is worthless once they throw in their hand.  Re Fannie/Freddie, William K. Black discerns a cunning plan:  self-servig executives deliberately took on toxic debt so as to ramp up gross revenues so as to ramp up their bonuses--banking on the premise that they would be gone before the roof fell in.  This is particularly tempting although it may attribute more rationality to the executives than they deserve.  Re: Kravis, I suppose you could say he need to maintain his presence so as to be regarded as  player, though this sounds an awful lot like a post-mortem justification.

In all three cases I suppose you could say that the players sucked out enough money in fees along the way so as to ameliorate the sting of ultimate loss, but this, too, sounds like after-the-fact ad hockery.   So we are left with the macho/testosterone readiing: in all cases, it was just too much fun.    As  Lieutenant Colonel Robert Duval said, "I love the smell of napalm in the morning."  Maybe in all three cases (and others such) the players just loved the smell of financial excess.

Friday, March 25, 2011

Cafeteria Libertarianism Question of the Week: Triangle Shirtwaist Fire

I suppose I'm beating this one to death but I'm actually not sure what the answer might be.  That is: I gather the Triangle Shirtwaist fire triggered a wave of worker safety legislation.  Would a consistent libertarian find this approach:
  • A naive and misdirected initiative, perhaps well-intentioned but sure to undermine the smooth functioning of the market.
In either case, I suppose the correct appelation would be "job-killing worker safety legislation."

Afterthought: when I wrote "holocaust," I was thinking of the other one.  But the shirtwaist fire will do.  

Opera Note: Le Comte Ory

Rossini wrote Le Comte Ory in 1828.  It had to wait 183 years for its Met premiere and I say it is worth the wait.  It's a breezy, energetic high-spirited romp (if you get my meaning) offering some of the most engaging music that Rossini ever fashioned--French sophistication and Italian brio, as someone said.  It intrigues me that it was written and produced during the reign of Charles X, surely one of the more reactionary sovereigns ever to grace the French throne--all the more amusing in that Rossini pillaged some of the music from a coronation piece he  had offered to the king just three years before: he figured the coronation piece was a dead end, and if he was going to get any mileage out of that warhorse, he'd better trick it up with a fancier vehicle.

It is also the only opera I know of that climaxes in a three-way and this (in the current production) in a Murphy  bed--an undocumented extra that does nothing to distract from the general air of good feeling.  I can think of one other opera whose final high point is a trio, and a pretty grand one at that:  Der Rosenkavalier,  where Hab' mir's gelobt is an effusion autumnal wisdom.  It also is wonderful music but the ladies maintain a tone of austere dignity with all six feet on the ground.

The Rossini threesome centers on Juan Diego Flórez, who pretty much owns bel canto comedy these days--the Met certainly is picture of him in a nun's habit with five-o'clock shadow.  The picture actually, if memory serves, popped up on a CD cover half a dozen or more years ago: these days it is on posters, programs and for all I know, a 70-dollar tee-shirt somewhere.  His companions in the sack are a fit match: Diana Damrau and Joyce DiDonato,each an A-list talent in her own right.  Review the bidding: that's a girl playing a girl; a girl playing a boy, and a boy playing a boy playing a girl.  As they used to say in "Spike Jones and the City Slickers," "I must go away somewhere and figure all this  out."  Just for the record, I don't really think DiDonato is that much smaller than Damrau, but with Damrau in full flouncy costume, DiDinato could be mistaken for one of those hors-d'oeuvre dogs that New Yorkers like to keep in their city apartments.  Bart Sher's set was imaginative and suitably funny and for once, not over the top.

Ambiance footnote: in The Wall Street Journal today, Marshall Heyman goes all hubba hubba about the donor's party.   He's right, the big donors were certainly in evidence, and some febrile cash jockey is probably working on a device right now that will make us all pay $50 to gape and admire (you know you want one!).  But Heyman might have added that thanks to the banquet, the whole cavernous interior public space smelled a lot like a Woolworth's basement.   Next up on the donor projects list: a much, much improved exhaust system.

100 Years Ago at This Hour

Triangle Shirtwaist fire, 440p EST March 25, 1911 on the eighth, ninth and tenth floor of the Asch Building (now the Brown Building of Science), Washington Place and Greene Street, Greenwich Village. One hundred and forty-six people died, mostly young women locked in at their workspace to keep them from skipping out early. The owners won an acquittal at their criminal trial but plaintiffs won compensation in a civil suit to the tune of $75 per deceased victim.

Thursday, March 24, 2011

It's a Marshmallow World

Scott Sumner (via Alex Tabarrock) weighs in on the great marshmallow divide, as in:  are you one of those losers with poor impulse control who cannot resist scarfing down a single marshmallow now, or a disciplined soul who waits and gets two marshmallows later?  Scott explores  the  political dimensions of the issue, thus linking to marshmallows to the grand tradition of culinary politics, as in "Put the Jam on the Lower Shelf where the Little Guy Can Reach It," or,  "Come the Ravolution, Vy All Have Egg in our Borscht," or, of course, "You'll Get Pie in the Sky when you Die (That's a Lie!)").

Scott/Alex appear to agree that Democrats are the one-marshmallow party.  I'd have to concede that Republicans are the party of making the pie higher but  when it comes to marshmallows, while they may favor two, they seem to entertain the odd notion that you can have marshmallows without paying for them.  And there is as remarkable, if tiny, subset who like to take their marshmallows   by the dozen, with whipped cream and a cherry on top, thank you very much.

Stoppard's Arcadia: Back on Broadway, More or Less

We took in the Stoppard Arcadia at the Ethel  Barrymore last night and it's like the reviews say.  In short, one of the weirdest theater experiences I've ever witnessed outside of a junior high school gymnasium.  The thing is that at least one, perhaps more , of the cast is/are literally unintelligible.  Local mileage may vary but I mean "unintelligible" in the sense of "you can't understand a word they are saying." And I don't mean just from the back of the house, either (we were in the middle).  And not just the English accents (they really aren't that heavy).  And I don't think it is the acoustics (else why are others just fine?).    And I won't blame Stoppard either: people say he is dense and he is dense in a way, but  I've always been sympatico with him and I never  had this kind of problem before.  Some critics have warned that you really need to have read the play before attending.  I had;  unfortunately, it was 15 years ago.

Critics have  been bashing it for unintelligibility (even as they enjoyed it for other reasons) (link, link) so I wouldn't be surprised if things are better now in mid-run than they were  at the beginning.  Still, there we are.  Too  bad; as I say, I'm a Stoppard fan and I think Arcadia  just might   be one of his better-integrated projects (he does tend to run on at the mouth sometimes).  But who would know?  On the basis of this outing, I can't say I would.

Wednesday, March 23, 2011

How Many Eggs did Butterfield Eat?

So, how many?  Hint, there's a Liz Taylor connection.  Go here.

A Treasure: Shahnamah

If you've got any interest in Central Asian stuff, go out of your way to the Asia Society Museum in New York City before May  2 to visit Muhammad Juki's Shahnama.   That would be 30-odd lovingly illustrated text-pages from the Iranian Book of Kings (King-Shah, get it?), created around the beginning of the 15th Century (jn what is now Afghanistan, but forget that).   It's a masterpiece in its own right, but more: when Babur, later in the same line,descended into the Ganges Valley and created the Mughal Empire, he took it with him; it generated a tradition of Mughal painting that extends virtually to this day.  There are some marvelous online resources (here is "Rustam slaying the White Div"), but there is nothing like a trip to the museum itself.  It's a small show and the pictures are small (they provide complimentary magnifiers), and while I can't pretend to have seen everything, this is surely one of the best in town.

Opera Note: Met Roméo et Juliette

 I was carping last night that Tchaikovsky's Queen of Spades has too slender a plot line.  Well   one thing you have to say about Mama Gounod's boy: the kid's got cojones: first he tackles Goethe, then Shakespeare.  I'm not up enough on Goethe to say for sure, but with Shakespeare, this is a problem: no matter how good he is, he is always going to be butting heads with his great predecessor.

It's a problem which, for my money, in Roméo et Juliette he never quite overcomes.  R&J has never been a special favorite of mine in the Shakespearean oeuvre, although I have to admit it has its moments (I just think it goes off the rails after Mercutio dies and that silly nurse and that calamitous priest take over).  Be that as it may, over and over again watching the Met's rendition of Gounod's version last night, I found myself thinking--nice bit of tune you've got there Charlie baby, but you'll just never top the great original, will you?

It's a problem aggravated  by the fact that you've got a pretty-good score played out by a pretty-good cast.  Indeed, probably the hit of the evening was a Juliette who is famous for being pretty-good: Hei Kyung Hong, a Met veteran who stepped in at the last minute to cover for the petulant Angela Gheorghiu.  Hong got a richly deserved boost  Zachary Woolfe in the Times: he reminded us that Hong is a trouper who, as Woolfe acidly put it, is one of those "singers who hold an opera company together."   Her Romeo, Piotr Beczala, was smooth and easy to enjoy.  He may have lacked a certain nuance although I suppose you could say he's supposed to lack nuance--he's (in the play) 15.  But that's another place where Shakespeare may just understand better how to do things: he can give us star-crossed lovers who (at once) spout glorious poetry, and are innocent, and are doomed. 

Tuesday, March 22, 2011

Today's Definition

  • gibbously - In a gibbous manner

Opera Note: Met Queen of Spades

They say a Wagner opera is one where you go at six o'clock and sit for three hours and look at your watch and it's 6:15.   Tchaikovsky is not quite the opposite: you can't say that three hours feels like 15 minutes.  But it's easy, if unchallenging listenin': a full evening of Queen of Spades (as, indeed, of Eugene Onegin) passes without strain or discomfort if, perhaps without a lot of challenge or engagement.  Full points to the met for undertaking an ambitious--one might say "lavish" presentation of this signature Russian offering.

The thing about a Tchaikovsky opera is that he had no real flair for drama.  The music flows smoothly and the invention is almost limitless but it's more a series of tableaux than an integrated story.  Well: there is a story--better, perhaps an "anecdote."  But it's wrapped loosely around a succession of set-pieces which form the bulk of the entertainment.  There's an obsessed gambler/protagonist echoing more of Dostoevsky than of Pushkin (i.e., who actually wrote it).  There's a delicate maiden who gets an undocumented extra scene in the third act so as  to hold the audience's attention.  There's an imperious dowager who could easily pass for Lady Bracknell except that there is nothing funny about her.   She dies of a fright in what is, as the guy behind me muttered "has got to be the quickest female death scene in all of opera."

The Met production is well sung all round--males perhaps a bit better than the females tough this might e just a consequence of the writing.  It's a pleasure to look at, although at times too ambitious even for this queen of houses: e.g., the whole chorus is on stage for the ballroom scene, so crowed that they are reduced to talking about dancing, while standing still.   Perhaps the best thing about the piece is the tang of Russian-folk flavor, not just intermittent, but defining the whole piece.  Not at all a waste of time, then, but if you got some free advice from the ghost of the woman you had just frightened to death, you'd think you might know there would be a catch to it.  

Monday, March 21, 2011

Bruce Bartlett Loses it Over the Republican Implosion

Bruce Bartlett says he is just as angry as the Tea Party and for the same reasons but...well, let him explain:
The final straw for me was the way Republicans rammed the Medicare Part D program into law in 2003. This took place at the very moment when the Medicare program was starting to seriously hemorrhage money. It was grossly irresponsible to add massively to its deficit largely for the purpose of buying re-election for Bush and his party in 2004.

This year, Medicare Part D will add about $55 billion to the deficit – far more than can be saved with all the budget cuts Republicans can possibly hope to achieve in fiscal 2011. Furthermore, it annoys me to see so many of those who voted for Medicare Part D, such as House Budget Committee chairman Paul Ryan (R-Wisc.), treated as if they are paragons of fiscal responsibility. In fact, their concern for excessive spending is highly selective, directed almost entirely at programs supported by Democrats primarily to undercut their political support, not because they care so much about deficits.

My disgust with the GOP became so intense after the Medicare Part D debacle, I wrote a book on the subject. I thought if conservatives broke with Bush at that time and adopted a more Tea Party-like approach to getting our fiscal house in order that it might stave off the political disasters I saw looming in 2006 and 2008.

Republicans preferred to kill the messenger, leading to my permanent estrangement from both the party and the conservative movement. But perhaps my effort wasn’t entirely for naught. Apparently, one of the few readers of my book was Rand Paul, who quotes me saying this:
The point is that George W. Bush has never demonstrated any interest in shrinking the size of government. And on many occasions, he has increased government significantly. Yet if there is anything that defines conservatism in America, it is hostility to government expansion. The idea of big government conservatism, a term often used to describe Bush’s philosophy, is a contradiction in terms.
So why is it that I have been disdainful of the Tea Party from its first manifestation in early 2009? The main reason is that so many of its members simply don’t know what they are talking about; they seem to think that strong opinions are a substitute for facts, research and analysis. Consequently, many Tea Party members hold views on various topics that are, frankly, nuts, and these views have been embraced by some Republican voters as well.
Read the rest here.      

Update:  The Crank is not impressed.

Sunday, March 20, 2011

The Economist on post-Japan Nukes.

The Economist offers two depressingly bracing insights on the nuclear industry post-Japan. One, it ain't goin' away. All the solar and wind and leftover fossil fuels are just not enough to satisfy our seemingly insatiable demand for energy. And the other, the countries most likely to double down on nukes are those least likely to be able to handle it--the ones without the institutional structure to minimize the likelihood of catastrophe, and to respond to it poorly when it happens. Link.


Back from a staging of the Brian Bedford Importance of Being Earnest, something struck me which perhaps all actors understand but I don't.  Specifically: people are always doing Shakespeare in some kind of off-the-wall  period dress: Civil War, Nazis, that sort of thing.   They do it with opera some too, particularly Handel and Wagner (think 22d Century).  But Oscar Wilde--people almost always fall over themselves to be as faithful to the author's own period--1890s London--as it is possible to be.  I don't want to sound prissy here: some attempts at period work fine, especially if you can use the period setting to wring something special out of the text.  Must be that the Victorian background of Wilde is just so densely textured that any attempt at displacement is more of a loss than again.

This was the performance of which Bedford is the director, but also the star: he plays the indomitable dowager Lady Bracknell.   Apparently this bit of cross-gendered casting has been done before, but as the critics have observed, Bedford earns full credit for playing it straight--no Dame Edna nods and winks.  People remark on his "comic timing," but it's more than just timing: Bedford knows exactly how to work an audience--how to make them laugh when he wants them to laugh, to shut up when he wants them to shut up.  He does play the maleness card in one aspect--his resonant base/baritone, which he can manipulate like a cello. 

From the Wise Women of the Tribe

My friend Ignota, after long years has at last extricated herself from an unpropitious marriage.  Her husband was a piece of business; his father was the same.  Ignota's mother-in-law, counseling Ignota's daughter, advises:

Do not marry a man who is interesting

Dorothy Parker would have understood:
Authors and actors and artists and such
Never know nothing, and never know much.
Sculptors and singers and those of their kidney
Tell their affairs from Seattle to Sydney.
Playwrights and poets and such horses' necks
Start off from anywhere, end up at sex.
Diarists, critics, and similar roe
Never say nothing and never say no.
People Who Do Things exceed my endurance;
God, for a man who solicits insurance!
Go here.

False Pride

How to guess your age: on the Number 6 train southbound from 86th Street last night, a woman perhaps half my age offered me her seat.  I turned her down.  Mostly false pride, I suppose, although I must say she looked like she had worked a hell of a lot harder than I had that day.

They Never Change, Do They?

He looked down his nose and added: '"The woman tempted me".'  'Adam,' said Mr Dancey hotly, 'was a cad.'  'I don't think,' said Henry, 'that comes well from a clergyman.'

--Elizabeth Bowen, Eva Trout 117 (Vintage 1999)

Note the intricate quotation marks.

Saturday, March 19, 2011

Background on Radiation Damage

My cousin Dave directs mus to a crisp and succinct briefer on the how and why of radiation damage,   The main takeway is that the Japanese do seem to be making the best of a bad thing, unlike those charged with cleaning up over what is still the worst modern civilian nuclear disaster.Here's a taste:
[S]ome of the emergency workers at Chernobyl received several sieverts of radiation, and many were working "basically naked" due to the heat, allowing contaminated powder to be absorbed through their skin. In comparison, the Japanese workers are most likely very well-equipped and protected at least from direct skin doses.
The thousands of children who became sick in the aftermath of the Chernobyl disaster were not harmed from direct radiation or even from inhalation of radioactive particles, but from drinking milk contaminated with cesium 137. The isotope, released by the Chernobyl explosion, had contaminated the grass on which cows fed, and the radioactive substance accumulated in cows' milk. Parents, unaware of the danger, served contaminated milk to their children. "Certainly this will not happen in Japan," [a commenter] says.

Cézanne at the Met

We spent a happy hour at the Metropolitan Museum of Art in New York this afternoon in the company of  Cézanne's Card Players.  It's  a show built round a single painting except that it's not: it's an elaborate study of the painting in the context of a tradition and a career.  You get to see a history of card-playing and of its companion, smoking; you get to see some of Cézanne's many ventures into the same or closely related subjects. You get to reflect on (though this may not have been a primary purpose) some of the resonances between Cézanne and more-or-less contemporaries like Van Gogh and Modigliani.  In the end you get to understand the painting as an episode in a continuing conversation and you get a vivid insight (one of the clearest I've ever enjoyed) into what makes Cézanne so much himself.    The show is a delight on its own terms but I love the concept.  I'd cheerfully go out of my way for any show that undertook to treat so interesting a work such a spirit of tactful inquiry.

Who'll Pay for Japan?

Anupam, watching Fox, is intrigued by a report on General Electric's potential liability for the Japan meltdown.  The number is: zero, nada, bubkas, zilch--apparently there is some sort of "channeling agreement," designed to ditch the cost onto Japanese taxpayers.  The market doesn't seem to be impressed.  Hard to know what an honest paranoid is supposed to think about this.  Is it new evidence of (political/economic) power in the  corporate megalith?  Or is it Fox trying to spin the stock out of the doldrums?

Meanwhile,Ritholtz has an instructive piece up on reinsurers, how much and what?  Weirdly, the news may not be all bad: catastrophic losses may mean they won't have to lower their premiums.  

Friday, March 18, 2011


Sent via BlackBerry by AT&T

A Low-Stress Nukes Story

Here's a nukes anecdote that will not freak you out.  My friend Roy was part of the team that built nukes in France--the ones designed to blow towards Germany, I assume.  He used to tell how he would assemble teams that played to the strengths of varying nationalities.  "And the Swiss provided the glue," he said.

I assumed he meant management skill, organizational knowhow, team spirit.

"No, no man, the glue.  The  Swiss make great glue."

Afterthought:  You hold together a nuclear power plant with glue? 

Off Again

We're off to NYC again for some opera, etc., and who would have guessed we'd get an almost picture-perfect evening, with temperatures in the 60s and a mellow breeze.  And I am happy to report that Mishima is still churning out topnotch sashimi.

Thursday, March 17, 2011

Felix is Bewildered

Felix Salmon is too polite to put it quite that way, but he really can't imagine what kind of lunatic designed the new pricing policy at the New York Times.  Me neither but I do note that about 10 minutes after the Times email, I got one from the Wall Street Journal calculated (I think) to make me believe that the Journal is cheaper.

One Man's Family and the Urban Ethos

Back in the Pleistocene 1940s, my sister Sally would drop everything for her weekly fix of One Man's Family, the long-running radio soap opera.  It's all about decency and good sense and plugging away at the middle class life and so many things of no possible interest to an 11-year-old boy. One of many things I  didn't grasp--I could hardly have cared about--at the time was that it took place in San Francisco, then as now surely as atypical an American city as you could imagine.  When I grew up and got my mind round the point I found it amusing in the respect that San Francisco was, in the period under review, a pretty rancorous place, with a piratical aristocracy and an inflammatory underclass.  To present it from the standpoint of the palliative Barbours had to count as an irony. (if you think I'm making this up, go here).

I see now that Kevin Starr, in his history of California, saw the point more clearly and expressed it better:
Like other successful provincial cities, San Francisco had a way of promoting a sense of well-being and self-esteem in its citizenry.  Take, for example, the Barbour family of Seacliff, the neighborhood fronting the Golden Gate.  From 1932 to 1956, some 3,256 episodes in all, this fictional San Francisco family appeared daily on a national radio show called One Man’s Family, written by San Franciscan Carleton Morse and originating from San Francisco radio station KPO for the NBC network.

The Barbours embodied what later became known as family values—in an unmistakably San Franciscan contest.  The program was filled with local references, including the stunning vista of the Golden Gate, which the Barbours could see from their rear living room window, or gaze at from their garden wall, where members of the family were wont to take refuge for meditation at times of perplexity.  One Man’s Family postulated San Francisco as a unified, prosperous, middle-class city, struggling through the Depression in a middle-American way, sustained in significant measure by the city the Barbours called home.  A decade later, San Francisco writer Kathryn Forbes successfully attempted similar themes in Mama’s Bank Account (1943) which went to Broadway as I Remember Mama: the story of a Norwegian immigrant family coming of age in San Francisco, sustained by a similar sense of well-being.

For the previous two decades, the mayor of San Francisco, James (Sunny Jim) Rolph Jr., had been making a specialty of promoting this sense of identification and well-being that Carleton Morse was now using as the psychological and social context of One Man’s Family.  Partly out of necessity, Rolph had made himself the master of making San Francisco feel good about itself.   … [The legacy of his first term] led not to an era of good feeling but to the most bitter and paranoid period in San Francisco history since … the late 1870s.
-Kevin Starr, The Dream Endures:  California Enters the 1940s (1997).

Afterthought:  And it's not just the OMF and the Mama, is it?  There's a whole genre of these gentle comedies of middle class life.   And more: a number of them--not OMF but surely Mama--add a fillip of ethnic reconciliation.  I'm thinking The Goldbergs, and Life with Luigi, probably (though this may be a stretch) Duffy's Tavern.  Not quite ethnic, but I would want to add Amos 'n' Andy, where Andrew H. Brown (at least) leads a life of middle-class striving much like all of the others.

Another afterthought:  Yes, I am aware that Amos 'n' Andy were voiced on radio by white actors.  FWIW, "Luigi" was an Irish-American, J. Carroll Naish.

The Yen is Where?

Let me get this straight: Japan suffers the worst catastrophe since the Second World War and the yen goes up?  That doesn't make sense to a lot of people.

It does make sense to Bob McTeer, and he undertakes to explain:
The enormity of the disaster and size of the move up by the yen does put into greater relief what I consider a common misconception about the relationship between the strength of a country’s economy and the strength of its currency. The conventional wisdom seems to be that a strong economy produces a strong currency and that a strong currency produces a strong economy. Not only does this week’s Japanese example run counter to that simplistic notion, but so does the Japanese example over the past two “lost decades” when the Yen nevertheless remained strong.
The United States experience highlights the other side of that misconception. Our economy has performed much better than Japan’s over that period yet the dollar went from weak to weaker. After the initial shakedown period, and until recently, the new Euro seemed to draw strength from an underperforming European economy.
I don’t consider these examples exceptions to the rule. I just think the rule is wrong. It is certainly not the way I learned it when I studied exchange rates in school. In the first place, the demand for the dollar, for example, is reflected in credits in the U.S. balance of payments (above the line). The supply of dollars on the foreign exchange market is reflected in debits (above the line) in the balance of payments. The exchange rate is determined by the balance of these debits and credits. I mention this obvious point to call your attention to the fact that exchange rates are discussed on cable TV without any reference to the balance of trade, the current account balance, or the overall balance of payments. It’s like trade and investment relationships are irrelevant to exchange rates. The level of interest rates compared to that of our trading partners is about all that is mentioned.
Many factors affect exchange rates, but I learned that the most important factor was relative rates of income growth. Domestic growth adds to our demand for imports; foreign growth adds to their demand for our exports. Therefore, other things equal, if we grow faster than our trading partners, it weakens our currency. If foreign growth is greater, it strengthens our currency. This is the exact opposite of what we usually hear, which is a positive relationship between growth and currency strength.
Oh, goodie, now I can trade and get rich Probably not, says McTeer. "[T]rying to outguess the [foreign exchange is] a crap shoot in most cases," he says. 

Wednesday, March 16, 2011

From Palookaville's Finest Bathroom Wall: Math Anxiety

The wall says:

30+8 = 40 pct raise in tuition in one year

To which a different handwriting appends:

(and firing math teachers)

Could use a proofreader too, I'd say.   

The Bride and Groom Will Dance to
"Look for the Union Label"

The Wichita bureau showcases the career opportunity of the day..

Might be a good place  to score chicks.

This Just In: The Whole
is Greater than
The Sum of the Parts

West's Key163 Exemptions
West's Key163I Nature and Extent
West's Key163I(C) Property and Rights Exempt
West's Key163k44 k. Vehicles and Teams.
163 ExemptionsParts which Chapter 7 debtor had collected from various sources, and which, while they had never been assembled, would, if assembled, comprise a working automobile, did not constitute a "vehicle," for purposes of Oregon exemption statute; while exemption statute was to be liberally construed, liberal construction could not transform pile of parts into automobile.
In re McMillin, 441 B.R. 348 (Bankr. D. Or. 2010)

Suggested by Barbara Bozonie, West Principal Attorney Editor
Link.  Headline: thanks, Kurt.

BGO: This Tunas's Not for Eating,
It's for Buying and Selling

  I took my only academic course in corporate finance in the fall of 1969 during my transitory stopover at the Yale Law School.   My teacher was Marvin Chirelstein and I cherish the memory: it was one of those courses where you wind up saying "I really have no idea what I am learning in this class but  am so glad I'm here."  In my own teaching career it has never been at the center of my skill set but it works its way sideways into a lot of things and every ten years ago, I teach the course itself.  I'm back to it now in what I trust will be my valedictory decennial venture.

And I think I am just now figuring out what the course is, or was, or has become.  Blinding glimpse of the obvious, perhaps, but put it this way: 40  years ago the course was (or I though it was) a course about, well, corporations, who need, well, finance.   The Ace Widget Works needs to retool, or expand into a new territory  It can issue new equity or borrow from the bank, or if it is  big enough, it can submit itself to the public bond market, under the exquisite mysteries of the Trust Indenture Act of 1939 (I'm sure I had never heard of any Trust Indenture Act until I took the course).    We also got a bracing taste of the then-new elixir of finance theory--efficient markets,  beta, Modigliani-Miller, that sort of thing (Black-Scholes was still a gleam in the creator's eye).

I may have been offbase even then, but this year I've been fighting the syllabus all semester up to this week when it finally sank  into me: "Corporate Finance" isn't about widgets any moreIt's about money--the aggregation, disaggregation and processing thereof.    You talk about hedge funds, about securitization, about monetizing the income stream, yadda yadda.  It's all fun stuff to learn and teach but the widget seems at times to function as no more than the Macguffin-- the device that drives the plot while harboring no independent significance.

I realize I am stepping onto contentious turf here, making assertions about the supposed financialization of the marketplace, and the alleged decline of intrinsic craft.  I know there is a lot of disagreement about whether and to what extent the marketplace has truly become swamped by finance. I concede that it's an empirical issue on which the answer is unlikely to be a simple yes or no.  I recognize also that it's nothing new, this war of the talent and the suits: it's an issue that goes back at least as far as Veblen (okay, a lot further).

I'm necessarily driven to speculate on why the world has changed (if it has changed) so much in forty years.  Seeking for the reasons, for the moment I can come up with two:
  • Cheap money.  Since the Volcker inflection which led to the Reagan boom,  we've been awash--some would say aslosh--in capital.  Arab oil zillionaires, Wisconsin schoolteachers, everybody throwing money at anybody who looked like they could make it grow, all seeking alpha before alpha enjoyed the dignity of a name.
  • Testosterone- driven dealmakers. They say there is nothing so inimical to the stability and good order of any society than a bunch of underemployed young males with more energy than good sense. As General Sherman said with perhaps a soupçon of hyperbole, "These men must all be killed or employed by us before we can hope for peace."  For our purposes is that these deal makers gotta have a deal.  Fish swim, birds fly, men drink and hotblooded young bankers cannot sit quietly in a little room.
These are my candidates.  Are there others?

Tuesday, March 15, 2011

More First-hand Japan

My friend NVJ (cf. infra) favors us with the email he sent home to the family from Tokyo just after it all started last Friday:
Ok, so you know I'm in Tokyo, and Tokyo got hit by a massive earthquake. It happened at 2:46 here on Friday. How do I know the exact time? I had just ended my lecture at the University of Tokyo when the building started to shake. I joked to the audience that it was God telling me to stop talking, but then shakes got stronger. After cracks began to appear in walls, and panels began falling out of the walls, we all filed out the building in a fairly orderly fashion.

Out in the common area, we could see trees shaking when there was no wind, felt the ground moving as if we were standing on thin mud over marble, and saw antennae on buildings swaying. After the first quake, we decided to go back in (about 60 people attended the lecture), and got about 15 minutes into the next lecture when the first aftershock hit (the first quake was 8.9; the aftershock was 7.1 -- all of my Japanese hosts, who are more or less used to earthquakes, said it was the worst series of quakes they had ever felt). We then left the law building for good and went to the reception in a modern hotel (where, in typical Japanese fashion, we continued the seminar over drinks and food!)

We then learned that all trains and subways were shut down. Imagine a city of 15 million (in a metropolitan area of 35 million) in which most of the workers take public transportation, and they cannot get home. (Many slept in their offices overnight). So after the reception, we decided to walk back to the hotel in darkness and temperatures of about 45 degrees. We joined a stream of people, six across, drudging our way back. All over the city it was as if snakes made of people were slithering down every street and alley in every direction at a dead crawl. All the cabs had gone home. Only buses seemed to be working. (yet all electricity and, to a certain extent, the Internet and mobile phones, were working, although phones usually brought forth a busy signal)

We then thought we were lucky and were able to catch a bus, crammed in like sardines (actually worse), which went about 1 mile in an hour and a half. Traffic was from hell. We then got off and resumed walking to the hotel. Another 45 minutes.

I then found that all the hotel elevators had been shut down, and we were told that it would be 2-3 hours before we could get to our rooms. (the hotel is is the 7th through the 19th floors of a skyscraper) They were undertaking a safety check of each room. Well, it was only 90 minutes later, but I had to stand the whole

My room is fine, but the pictures were askew, and I can tell from the wrinkled paint in the corners of the room that some shaking went on here. The restaurant in the hotel is serving only cold food as they are not allowed to use gas (but they did manage a warm soup in an electric cooker).

So for now I'm safe, all electricity works most of the time (as does the Internet), and all my stuff is intact. Aftershocks which rock the room and sway the drapes happen every few hours. Looking forward to leaving on Monday, but fine for now.
NVJ sneers at my cracks about Tokyo food prices. He says it's cheaper than Von's. Ah, but there was a time when the dollar got you 300 yen. 

Jackie Speier: Been There, Done That

Congresswoman Jackie Speier, little more than a name to me, reports on a close call with the B-word:
Let me tell you a bit about my experience with bankruptcy or--perhaps it's more accurate to say--my non-experience.

In 1993, a crime was committed against my family.  A man who ultimately went to jail placed a fraudulent mechanics lien on our home--it was up for sale and that caused the sale of the home to fail.  We'd already moved on so now we were saddled with both mortgages.

Carrying these mortgages was tough on us financially, even though my husband did well as an emergency room physician.  So we did something that will always haunt me.  We cut expenses.  We cut expenses, in part, by cancelling Steve's life insurance.  It was only going to be a few months, right?

Then, a few weeks later, the unthinkable happened. A man who knew that he had no brakes on  his car decided that he was going to drive to work.  He ran a red light and killed Steve.

So here I was--no husband, I owned these homes, I was pregnant with our second child and we'd cancelled the life insurance.  In short, bankruptcy definitely loomed.
That's from a speech she gave a while back to the National Association of Bankruptcy Trustees, reprinted in their trade sheet, NABTTalk, Vol, 26, Issue 4, Winter, 2010.   You will surmise that it worked out well enough: she sold the house, and the rest is history.  Aside from the episode at hand, I know nothing about her.   But I gather that in Singapore, you can't even take a seat in the legislature unless you have an MBA or a degree in engineering.  Or maybe it's just an urban myth: anyway,  I should think they might want to make an exception for a resume like this one from Jackie Speier. 

Screw the "Characteristics," Give Us the Capitalism

Must-read of the week is a gritty on-the-grounder about "capitalism with Chinese characteristics," and how we'd all be better off with more capitalism, fewer characteristics.   Focus on Zhejiang, where the livelihood use to settle on
used packaging, plucked chicken feathers, tattered cotton and spent toothpaste tubes.
The adjacent indoor market now features:
bales of wire, crockery, wrenches, lights, cutlery, pens, toys, tools, ornaments for the world’s holidaymakers and even newly manufactured Middle Eastern “antiques”. Across the street are halal restaurants for the many Arab customers.
For perspective you might want to match it with a piece on rustbelt recovery and another on the culture of disability payments--one government goodie that nobody has the stomach to disturb.  

Another First-Hand Report

My friend  NVJ is safe at home:
Just back from 6 days in Japan. Quake hit just as I was concluding my presentation at a conference at the University of Tokyo. Friday was weird, but calmingly weird. Imagine a city of 35 million with no public transport, upon which most people rely.

Saturday and Sunday were spent returning to normal. Crowds buying goods in Ginza on Sunday and the basements of department stores -- where they sell lots of food (bento boxes, sushi, fruit) had lots to sell at decent prices.

Transport crunched a little when I left on Monday, but still got the airport, and plane still took off.

Maybe only a country like Japan could take this. But my Japanese hosts, who had seem lots of earthquakes (as have I) were visibly shaken at this one.

Lots more stories, but add one to the list of "in Tokyo, at least, relative calm."
 "Lots of decent prices."  I suspect maybe he was in Jakarta.

Monday, March 14, 2011




Oh, That'll Catch 'em

Don't these guys have a clue about branding?

Next up: lyrics to the new fight song.

"Public" Google

My friend Anupam has been reading the Google 10-K and finds nuance in the notion of "public" company:
Our Class B common stock has 10 votes per share and our Class A common stock has one vote per share. As of January 31, 2011, Larry, Sergey, and Eric owned approximately 91% of our outstanding Class B common stock, representing approximately 67% of the voting power of our outstanding capital stock. Larry, Sergey, and Eric therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets, for the foreseeable future. This concentrated control limits our stockholders’ ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. As a result, the market price of our Class A common stock could be adversely affected. 
Others point out that Google is hardly unique; nobody thinks of Berkshire Hathaway as anything but Warren Buffett, and the Ford family still controls "public" Ford. 

Japan Update

Just read some first-hand on-the-ground email from Japan, which I don't have permission to quote, but which can be usefully summarized.  The key point is that, whatever you see on CNN, a lot of Japan is actually something like close to normal.   Tokyo is open for business as for the heavily populated industrial heartland to the south; also (more of a surprise to me) the far north island of Hokkaido.  They're having aftershocks and they're being told they will face rolling power outages but (another surprise?) they haven't started yet.

And the nukes--boy, the nukes.  Still too early to guess how that will play out.   I grant that my first thought was--oboy, as a political program, nuclear power is dead.  Well, maybe.   I can't really blame the networks for showcasing nukes over the weekend; nobody wants to underestimate the threat of a nuclear disaster.  But if it turns out that the Japanese somehow dodged a plutonium bullet here, I wonder if maybe nukes will come charging back stronger than ever.  Like the stock market "crash" of 1987 which taught a generation of traders that market busts don't matter (sarcasm).  

Update to update:  well, you pays your money .... link.

A Success Story about (gasp!) New England Farming

UB groupies know they can count on us for intermittent spasms of anguish about the bleak folly of trying to farm the New Hampshire uplands. But here's an interesting wrinkle: a source who argues that there was one brief period when New Hampshire farming actually made money. The secret it emerges, was sheep; evidently they thrived in this unforgiving climate, albeit not vigorously enough to survive the onslaught of foreign competition and technological innovation.

The proponent is a chap named Steve Taylor who by all accounts has the background to equip him to know whereof he speaks. I can't find his work in print so far, but here is a promising summary:
According to Steve Taylor, Plainfield farmer and retired New Hampshire Commissioner of Agriculture, the only period of agricultural prosperity in the state, albeit a “flash in the pan,” occurred with the institution of sheep farming in the 19th century. Forests were “stubbed,” a process of girdling, burning and clearing away trees; 250,000 miles of stone walls were constructed (100,000 miles remain today); 1,500 Marino sheep were imported from Spain and bred until they outnumbered the human population; woolen mills popped up in nearly every village; and the sheep farmers thrived building large country estates supported by a strong demand of wool products.

The construction of the Erie Canal and the development of railroads (opening the European market to the Midwest), competition from Australia and Argentina, and the Industrial Revolution (workers worked indoors warmed by box stoves instead of heavy wool coats), all contributed to the equally rapid decline of the sheep farmers prosperity.

It’s been more than 150 years since the sheep boom and now the forest fills 85% of the New Hampshire landscape, which was once pastureland, and only 5% in open farmland remains. Taylor is fighting to retain the small niche that farmland holds today.
And here I thought those stone walls went back to the 18th Century, or even the 17th.  In my youth, they were great for berry picking. I should think the berries also have faded, the victim in this case of the second growth timber.  I assume the population of rattlesnakes, still a novelty in my youth, continues to grow.

Sunday, March 13, 2011

Alex Tabarrock Proves he is Just Another Cafeteria Libertarian

Ooh, this one ought to get him drummed out of the sodality: Alex Tabarrock shamefacedly admits that he is not that-all opposed to--no he actually likes--having the jackbooted thugs in Washington shackle us with the crime of daylight savings time.    In  a frantic rearguard attempt to retain his street cred, Alex does say he would have opposed it when first introduced but that kind of coulda woulda shoulda is hardly the sort of thing that will impress the pure in heart.

Alex fails to press the inquiry one more step, however, to ask: why should the gummint get its cotten pickin' hands on things like time-setting at all?  Why can't we perfectly well solve this problem by private agreement:  I'll meet you when the abscissa of the cosine of the shadow of my hoe handle touches 43" south latitude (as defined by the wholly voluntary recommended-south-latitude standards advisory committee)?

No word yet on whether Grover Norquist thinks daylight savings time worse than the holocaust. 

Japan Debt

I can hear the noise machine wheels begin to turn already as they gear up to din it into us how the Japanese calamity is just one more reason why we have to cut Headstart/NPR etc. Japan's debt is already the highest of any country but Zimbabwe (they will remind us) and now they will have to rebuild and oh dear we don't want to go there.

Narrowly speaking, they are right. At twice GDP, Japan's debt is way too high and no we don't want to go there  (we're still under one times GDP, but  climbing). But there is one central fact about Japanese debt that doesn't (I think) get sufficient attention. That is: 95 percent of Japanese debt is owed to other Japanese. For the US, the figure is more like 75 percent--much lower, if you recognize that a goodly chunk of that debt is money the US government owes to itself.

That extraordinary high level of domestic debt--coupled with a correspondingly gasp-inducing level of private savings--is Japan's blessing and its curse.  It is partly tied up with the way Japan has been so adept at pushing its fiscal problems under the table (so as to "save face"(!)).  But it is also part and parcel of the Japanese sense of "we're all in this together," together with an extraordinary impulse to make things work.

I don't mean to glamorize here.  Japan certainly is (not to put too fine a point on it) rich in contradictions--the nastiest of conquerors, isolationist and xenophobic, second to none in violent porn.    But even before this week, the Japanese had already suffered the worst nuclear calamity in human history.  And recovered with an energy and resiliency that put all the rest of us to shame.

Fun fact: principal foreign holders of US public debt: the Japanese.

Zero Tolerance

Number of Japanese nuclear plants in crisis: two.

Number of nuclear plants in Japan, total: 55.

Unfortunately, we are in a field where 96 is not a passing grade. 

Saturday, March 12, 2011

They Don't Make Speakers Like They Used To

NYT's Gail Collins notes that former House Speaker Newt ("The Pope Forgave Me!") Gingrich gets a day older every day.  Old Washington hand Joe Carter recalls another relic of the Speaker's aerie:
I remember when that sorry (then and now) Newt was raising hell with my pal Speaker Jim Wright--then shortly did duplicate stuff himself and nobody screamed.

I see Wright some. He's in his 80s, has an office high in the library at Texas Christian U, Fort Worth, and his desk is piled high with unanswered mail. I asked him where was his help (Carl Albert had three clerks on the House payroll when he was retired in the Carl Albert Federal Building--rent free--in McAlester, Okla.)?

Jim said the House stripped his budget--but, with Repug speakers into retirement--are becoming remorseful. As he can, he calls folks and talks about what they asked. He is very philosophical and relaxed. Still a great speaker (even tho his voice was damaged by cancer that was cut out). A great guy and with a profound sense of humor and chuckles about the ironic, lying, anti-American right wing who call their Godless selves "Christians, patriots and Newt Gingrich."

As we watch the idiocy of the the Tea Party, Newt and Palin sway the ignorant majority--and things like SSI and black lung benefits, Title 18 & 19, Social Security and civilized government increasingly fail--maybe there will be an awakening.
Thanks to Joe, previously unknown to me, a buddy of my buddy Ivan. Am advised that Joe worked for four Democratic members of Congress; served on White House staffs under Presidents Johnson and Carter, and rode the press bus behind John F. Kennedy in the  fateful Dallas motorcade so he is entitled to take the long view. 

News You Cannot Possibly Use

Larry advises that the Shean (sic) of Gallagher Shean was not Irish; he was a German Jew. Next thing he'll be telling us that Gallagher was a Galitzianer.

Live from Japan

HT BoingBoing.

Friday, March 11, 2011

Google Japan Earthquake/Tsunami Link

Links here:

H/T Wichita Bureau.

Category Blurring in Law/Finance

Larry Ribstein showcases an intriguing new turn in law/business education--a proposal for an "executive MBA in law."    Larry quotes the prospectus:
The year-long program, which runs in the evenings and on weekends, will examine the impact of globalization on laws, legal institutions and capital markets. * * * This is a way for people to engage, in a more in-depth way academically, those issues they’re facing at work. * * *
 Maybe so, although when Larry gushes
It’s not just some glorified CLE. It’s theory that matters in the real world, taught by a leading law-and-econ faculty to non-lawyers.
...I have to wonder if he left his crap detector home in his other suit.  Just in general, when I hear the phrase "executive education" I smell polyester: I tend to imagine  guys making $45k a year and dreaming of $60k--that is, "executive" in the sense of "aspirational," aka "in your dreams."  And whenever a professor of anything talks about "theory that matters in the real world," he's talking in an echo-chamber unencumbered  by the  views of students who doubt that theory ever matters except insofar as it might buff a resume.   Still I would have to grant that "theory" in finance may "matter in the real world" more than other kinds of theory, but precisely because it has done more harm (maybe Marxism is a competitor here).  I can't count the number of times a student has growled contemptuously that the Efficient Capital Markets Hypothesis, say, "isn't even true"--to which the appropriate response is: that's precisely why it is so interesting.   I mean--if a "true" theory dominates the world, it's just part of the grand plan; if a false one, then it can cause no end of mischief.

But I'm a fine one to talk: I admit I have been pretending to teach crossover law/finance "theory that matters in the real world" for twenty-odd years now and I can certainly concede that the categories  blur.  I remember one year when I was putting my law school kiddies through  Brealey & Myers; late in the semester, I noticed that my successor in the classroom was a business school guy wielding Brudney & Chirelstein.  But in any event, I regularly get evaluations from students complaining that "I've got a friend in an investment bank and he says he doesn't have to know any of this stuff."  The said truth is that he is --not right exactly, but a lot closer to right than most professors would want to admit.

Meanwhile Joel points us to what may be an even more diverting venture: impeccably biglaw Milbank Tweed is offering its associates "professional development courses on business, accounting, economics, finance and negotiating" in cooperation with "Harvard’s Law and Business faculties"--branded as Milbank@Harvard. Speaking as an unreconstructed nerd, I must say this sounds like a lot of fun--and am I right to suspect that this is precisely the point?   The blurb reads like nothing so much as a recruiting teaser--you  missed Harvard the first time, we spray holy water on you and set you right so when your biglaw career goes into a low-altitude stall you can bail out with a better resume.  Odd, though, that they are admitting they even hire from other than Harvard. 

Thursday, March 10, 2011

Potty Animal: What Rand Paul Teaches about the Libertarian Message

Mucking around in Rand Paul's effusion of intestinal plenitude, I just discovered I didn't know before about how libertarians deal with the issue of free trade.  It's a  problem for any libertarian who wants to get votes because free trade is (a) a keystone of the libertarian mantra; and (b) horrendously unpopular with voters, perhaps particularly the voters to whom folks like Paul want most to appeal.

But here's the key: you blame it on the environmentalists.  Or more abstractly, the rule-makers, what George Wallace used to call the pointy-headed bureaucrats who kick back in Washington over their chardonnay to think of new ways to make life difficult for honest working folk.  It's their fault that we can't make good honest American crap products any more and so have to buy from the cheap foreign competition. It's a floor wax and a dessert topping: a world where you can be for trade and against it, for competition and against it, all in the same breath. The new meaning of "freedom." 

Something I Just Now Learned about ECMH

Here's a point about the much-maligned Efficient Capital Market Hypothesis that just sank into me while reading Sebastian Mallaby's More Money than God.  But first, a shout-out for the book: it is a splendid piece of work, as carefully-thought-out and fully-informed as any piece of finance journalism I can remember.  Plenty of credit to Mallaby, although I suspect that a lot of credit goes also to his handlers at the Council on Foreign Relations, who appear to have given him the kind of backup (= time and money, etc.) that most journalists can only dream of.  But as I say, the real point is that he used it well.

Anyway, to the point at hand.  Mallaby is insistent--one might say to the point of tendentiousness--that hedge funds disprove ECMH.  He's probably right here, even if he does overdo it a bit. But the insight, for me,, concerns the kind of skill or knowledge that successful hedgies bring to bear, so as to earn alpha returns.

My point is that the vast majority of the successful hedge fund operators appear not to have focused on individual securities so much as on markets as a whole.  Their skill, in short, is not the Ben Graham value investor skill: it is much more a mastery of the poker-playing, head-butting, roller-derby turmoil of the trading arena.  That seems almost definitionally true of somebody like Paul Tudor Jones, who got his start in the cotton exchange.  I'd say it is equally true for George Soros' seemingly inborn knack for understanding a market as an N-dimensional Rubik's cube.   Even a trader like Julian Robertson who may appear more closely wedded to the equity market, seems to have made his money as much from his grasp of the "market" part as of the "equity."  As if to further the point,  Thomas F. Steyer may prove the role by indirection: he seemed to do almost everything right until he got bogged down in a Colorado land development project, finding himself coping with the cares and disappointments that are bound to face almost any front-line entrepreneur.

I don't pretend to offer any blazing new insight here.  And I don't mean to be understood as "exposing" the hedge fund industry.  I tend to agree with Mallaby that the hedgies acquitted themselves rather well in the late uproar and maybe one thing we can do to ease the pain on another day is to encourage them to do more of the same.  I'm just struggling for a point about what it is that ECMH does and does not comprehend.  I suspect my point (if any) is that there's next to nothing in ECMH about market (for lack of a better word) "structure" and how it may affect pricing.  Yet it is these insights about "structure" that provide some of the most interesting insights into the degree to which ECMH may not tell us much at all.

Side note: I can see that when I start talking about "structure," I'm veering perilously close to what the chartists do--head and shoulders, cup and handle, flag and pennant, all that stuff.  I know that any self-respecting academic will regard charts with contempt--will tell you that it is impossible in principle for the charts to be correct, and that not a shred of evidence can be found to support the chartist's view. Yet it is remarkable how many of the successful hedgies some to go around with a bunch of charts under their arm.